The U.S. Department of Housing and Urban Development is rolling out funds tied to the Housing and Economic Recovery Act of 2008, and announced Friday that its newly-minted Neighborhood Stabilization Program (NSP) will provide $3.92 billion in relief to areas suffering high foreclosure rates.
“Clearly, the intent is to put this money to work in communities with the highest need and to have a meaningful impact,” HUD secretary Steve Preston said in a press statement.
State and local governments will see the NSP funds in the form of neighborhood stabilization grants, which can be used to assist low- to moderate-income home buyers with down payments or closing costs. The funds also allow governments to buy up and redevelop foreclosed properties “that might otherwise become sources of abandonment and blight within their communities,” according to HUD’s Web site.
The grants will be distributed during the next 18 months to target areas based on the rates of subprime mortgages, mortgage defaults and delinquencies and foreclosures.
In an attempt to prevent foreclosures, the program requires housing counseling for home buyers who receive assistance. It also requires state and local governments to enforce sound lending practices to home buyers who benefit from the program.
HUD wasted no time getting the funds out to hard-hit areas. The California Department of Housing and Community Development (HCD) announced the receipt of its $529 million share of the NSP funds Friday.
“This money will rejuvenate neighborhoods and communities that are hardest hit by the foreclosure crisis,” said department director Lynn L. Jacobs in a press release. “HCD is committed to getting this funding out as quickly as possible to provide prompt relief and assistance to individuals, families and communities throughout California.”
No doubt some of the funds will go straight to California’s Orange County, which has seen its share of the housing crisis. You can read all about Orange County’s house pricing woes in the inaugural issue of HW Magazine; click here to learn more.